ABSTRACT
This chapter explains the potential use of cash flow accounting (CFA) and value added (VA), to take over the role of profit measurement in corporate reports. CFA and VA are both measures that have been drafted in from other valid uses to bear an unreasonably heavy burden in the assessment of corporate performance. Cash flows have an undoubted importance for liquidity assessment and VA has important economic applications, but neither is capable of summarizing the accretion in corporate resources which is encompassed in an all-inclusive profit measure based on entry or exit values. Rutherford's analysis of allocation problems of CFA is countered by Lee, who concludes that allocation problems do not apply to CFA if proper care and attention is paid to the basics of accounting. In addition, there would be a balance sheet and income statement on an net realizable value accounting (NRVA) basis, entitled 'statement of net cash and cash equivalent resources' and 'statement of retained income' respectively.
